Retail Sales Rise

Once again the headline for the retail sales report understates underlying strength. Total retail sales rose only 0.2 percent in November which is just under the Econoday consensus. But weakness here came from all places from vehicles which otherwise have been this year's standout component for this report. Excluding vehicles, sales rose 0.4 percent which is 1 tenth above expectations. Excluding both vehicles and gas, core sales rose a very solid 0.5 percent which is 2 tenths above expectations. A key discretionary category, restaurants, shows yet another very strong gain, this at 0.7 percent in the month. Also showing sizable gains are electronics & appliances, clothing & accessories, non-store retailers (once again), and the general merchandise category where, despite a deflationary pull from falling import prices, sales jumped 0.7 percent in the month. These gains point to success for the month-end Black Friday sales holiday. The consumer, boosted by a solid labor market and having more money to spend because of low gas prices, is definitely alive and spending going into the final weeks of the holiday season.

Recent History Of This Indicator:
Consumer spending has been lukewarm going into year-end but in part reflects low sales at gasoline stations which are getting hurt, and continue to get hurt, by low prices. But vehicle sales have been strong though unit sales in November, holding for a third month at a 12-year high, aren't pointing to a monthly gain for the motor vehicle component. Ex-auto ex-gas core sales have been showing some life with October coming in at plus 0.3 percent. For November, forecasters see core sales rising another 0.3 percent despite unseasonably warm weather that likely held down sales of winter goods. Total retail sales are also expected to rise 0.3 percent as are ex-auto sales.